positive sentiment


Bursa remain mixed at mid-afternoon

KUALA LUMPUR, June 18 — Bursa Malaysia remained mixed at mid-afternoon, amid cautious mood among investors ahead of the two-day US Federal Reserve’s policy meeting scheduled today. Buying in MISC, Hong Leong and Axiata shares led the local…

Renewed investors interest pushes ringgit up against US dollar at opening

KUALA LUMPUR, June 18 — The ringgit inch upwards against the US dollar, backed by renewed interest from foreign investors on the prospects of Malaysia’s economy. At 9am, the ringgit was at 4.1760/1880 against the greenback from 4.1770/1800 at…

Bursa Malaysia continues uptrend at opening

KUALA LUMPUR: Bursa Malaysia continued its uptrend to open higher this morning, supported by positive sentiment surrounding the market.

At 9.06am, the key FTSE Bursa Malaysia KLCI (FBM KLCI) nudged 1.22 points at 1,656.69 from 1,655.47 at 5pm on Monday.

The barometer index opened 0.33 of a point better at 1,655.80.

Market breadth was positive as gainers led losers 125 to 52, with 191 counters unchanged, 1,519 untraded and 25 suspended.

Turnover stood at 107.57 million worth RM49.52 million.

Malacca Securities Sdn Bhd said there is some measure of stability in the market, helped by the easing of trade disputes and potential US government monetary policy supports.

“With the near term market sentiment on a calmer note, we see further near term upsides on the lower liners and broader market shares on rotational and trading activities,“ it said.

However, it noted that the overall outlook is still murky as the unresolved US-China tariff war remains the biggest impediment that will continue to leave sentiments on the wary side.

It said Bursa Malaysia remained overbought and this is likely to temper the upside potential over the near term.

“Therefore, we think that the upsides will remain mild as the buying will become more selective after the recent strong gains that have seen the key index gaining nearly five per cent from its low of 1,580 points a month ago.

“The FBM KLCI could now test the 1,657-1,660 levels, before making a pass at the 1,673 level. The supports, on the other hand, are at 1,650 and 1,644 points respectively,“ it said in a note.

Meanwhile, the lower liners and broader market shares could continue to make headway as market participation returns that are also seeing renewed buying on selected stocks, it added.

Among heavyweights, Tenaga increased six sen each to RM12.82, CIMB gained three sen to RM5.31, Maybank shed two sen to RM9.02, while Public Bank and Petronas Chemicals were flat at RM23.50 and RM8.38 respectively.

Of the actively-traded stocks, IRIS Corporation and Scomi edged up half-a-sen to 16 sen and 6.5 sen respectively, Ekovest perked one sen to 86 sen and Iskandar Waterfront City added three sen to 97 sen.

The FBM Emas Index gained 6.69 points to 11,649.05, the FBMT 100 Index increased 7.02 points to 11,504.14 and the FBM Emas Shariah Index improved rose 8.95 points to 11,861.17.

The FBM 70 added 3.10 points to 14,358.20 and the FBM Ace bagged 8.82 points to 4,389.72.

Sector-wise, the Financial Services Index was 8.50 points higher at 16,914.71 and the Industrial Products & Services Index added 0.01 of-a-point to 160.75 and the Plantation Index gained 18.16 points to 6,900.17. – Bernama

Bursa Malaysia opens higher on upward momentum

KUALA LUMPUR, June 10 — Bursa Malaysia opened higher this morning, in continuing its upward momentum on the back of positive sentiment surrounding the market. At 9.05am, the key FTSE Bursa Malaysia KLCI (FBM KLCI)…

Malaysia maintains 22nd position in IMD World Competitiveness Yearbook 2019, says minister

KUALA LUMPUR, May 29 ― Malaysia has maintained its 22nd rank, among 63 countries, in the World Competitiveness Yearbook (WCY) 2019 published by IMD World Competitiveness Centre, based in Lausanne, Switzerland. With a score of 82.54 out of 100…

Bursa Malaysia poised to gain further to test 1,620 level

KUALA LUMPUR: Bursa Malaysia is set to rise further next week to test the immediate resistance at 1,620 and the next resistance threshold of 1,650.

Phillip Capital Management, Asia-Pacific, senior vice president (investment) Datuk Dr Nazri Khan Adam Khan said the near-term view suggests that the KLCI will continue hovering above the key support level of 1,600.

He said positive overnight Wall Street performance, Bank Negara Malaysia’s overnight policy rate (OPR) cut, rising prices of commodities and ease of the US-China trade tension would drive positive sentiment next week.

“Although the ongoing trade tension gave a sour impact to the ringgit versus the greenback, the local market remains attractive with the capital market recording a net inflow of RM2.1 billion,” he said.

Fundamentally, the local market continues to be resilient against the external headwinds with diversified sources of growth.

“Our participation in the ‘Belt and Road Initiative’ will give long-term advantage to the economic growth, as an important catalyst for foreign direct investment and connectivity to the global market.

“Looking forward, the lower OPR could be an important factor to boost the local economy in the second half of the year,” he said.

Nazri Khan said OPR cuts and the revival of the East Coast Rail Link and Bandar Malaysia projects would give a breath of fresh air for economic growth.

He said despite the weakness in investment activities, the local market posted a 4.5% growth in the first quarter of 2019.

“This is partly derived by the positive improvement in the agriculture sector and firm private consumption. This gives positive impact to the manufacturing sector, as well as the household spending,”he said.

In line with the encouraging private sector spending, BNM maintained its projection that the GDP will continue to grow between 4.3% – 4.8% this year.

He said despite the US-China spat have gave sour impact to the ringgit against the greenback, the local market remained to be attractive, given the RM2.1 billion net inflow recorded in the capital market.

Nazri said the S&P 500’s three-day winning streak during the week showed calmness towards the current state of trading relations between Washington and Beijing.

“We believe the US’ decision to effectively ban Chinese phone maker Huawei from the US market has overshadowed the earlier move to apply import taxes on European-made cars,” he said.

Overall, Bursa Malaysia was mostly higher despite the mounting concerns over the US-China trade spat.

On a Friday-to-Friday basis, the benchmark FBM KLCI settled 4.91 points weaker at 1,605.36.

The FBM Emas Index declined 74.91 points to 11,300.05, the FBMT 100 Index depreciated 68.25 points to 11,136.80 and the FBM Emas Shariah Index erased 99.09 points to 11,451.34.

The FBM Ace Index fell 137.43 points to 4,395.14 and the FBM 70 shrank 223.73 points to 13,855.32.

Sector-wise, the Financial Services Index dropped 3.31 points to 16,562.87, the Plantation Index eased 154.78 points to 6,895.50, and the Industrial Products and Services Index gave up 2.86 points to 163.82.

Weekly turnover inched down to 11.80 billion units valued at RM9.41 billion from 12.71 billion units valued at RM9.87 billion last Friday.

Main Market volume was weaker at 6.97 billion shares worth RM8.65 billion compared with 8.02 billion shares worth RM8.85 billion.

Warrants turnover slid to 1.67 billion units valued at RM427.70 million from 2.54 billion units valued at RM704.83 million.

The ACE Market volume, however, was higher at 3.22 billion shares worth RM326.88 million from 2.14 billion shares valued at RM301.87 million previously. – Bernama

Axiata and Digi on a roll

PETALING JAYA: Shares of Axiata Group Bhd and Digi.com Bhd rallied as much as 18.3% and 11.5% on positive sentiment towards their merger deal.

Axiata’s share price surged as much as 74 sen to a seven-month high of RM4.78 before closing 60 sen or 14.9% higher at RM4.64 on 38.17 million shares changing hands.

Digi, meanwhile, soared as much as 52 sen to RM5.04, the highest in the past one year. At market close, the stock gained 28 sen or 6.2% to RM4.80 on 36.88 million shares done.

On Monday, Axiata and Digi’s parent company Telenor announced that they are in the talks to merge Asian operations.

While this deal is positive for both Axiata and Digi, AmResearch expects the potential synergies and cost savings to have a higher boost to Axiata, which currently trades at an EV (enterprise value) /Ebitda (earnings before interest, taxes, depreciation and amortisation) of only 5 times, less than half of Digi’s 12 times.

“Additionally, the merged entity’s expanded financial leverage comes from Digi’s low gearing which could subsequently impact the merged entity’s dividend policy,” it said in a research note today.

HLIB Research concurred, saying that Axiata is expected to gain more given that the proposed corporate exercise allows it to crystalise the true value of its assets.

As for Digi, it opined that the consolidation with Celcom may lead to short-term indigestion due to the huge duplications in terms of assets (towers, infrastructure) as well as human capital.

“We do not discount that the merger may lead to asset impairments and one-off restructuring costs. However, we are still positive on the amalgamated Digi-Celcom over the long run.”

However, AmResearch is uncertain if the Malaysian Communications and Multimedia Commission and current political regime would approve this proposal given that a merger would reduce the level of competition at the expense of consumers’ choice and pricing alternatives.

“We reiterate our view that such an extensive restructuring exercise could be hindered by the respective country’s regulatory oversight.”

HLIB pointed out that Malaysia is the only overlapping market in this proposed deal. The combination of Celcom and Digi will lead to a largest telco with revenue and subs market share of 35% and 47%, respectively and potentially attract scrutiny from the perspective of anti-competition. Together, they will also hold 43% of the operating TDD airwave in the market.

“Axiata may end up with conflicting stakes in Grameenphone (via MergedCo) and Robi who are top one and two competitors in Bangladesh. Other Robi shareholders, namely Bharti (25% stake) and NTT Docomo (6.3% stake), may not favour this scenario.”

HLIB is maintaining a neutral call on the telco sector, adding that the telco sector remains stable supported by resilient domestic demand with dependable dividend yield being a plus point in a volatile market.

PublicInvest Research has upgraded Digi to “trading buy” as it believes the deal would be positive to DiGi, while Axiata is kept “neutral”.

Nonetheless, the research house said the merger between Celcom and DiGi is negative to Maxis as the merged unit is expected to overtake Maxis to become the leader in Malaysia’s mobile segment.

The merged entity will be an unlisted arm though there are plans for a public offering within the next few years.

“In our opinion, DiGi and Axiata should ultimately be privatized once the merged entity is listed,” said PublicInvest.

Again, sell in May and go away?

PETALING JAYA: The month of May has always been perceived as “not so positive” for the stock market and the same scenario could be repeated this year.

With the US S&P500 on the verge of overbought territory, profit-taking is possible next month, lending some truth to the financial adage “sell in May and go away”, says Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew.

He noted that the already subdued FBM KLCI may face more selling pressure next month.

“It is quite possible, I would not rule it out. Coincidentally, the market in the US slipped into what we call ‘overbought territory’. As a result of previous trading action, the market is in bearish divergence mode. Bullish but underlying indicators show a weakening trend,” he told SunBiz.

Pong noted that profit-taking may not always happen in May but, last year, selling in May would have been good advice as the FBM KLCI fell to 1,719.28 points at the end of May from an all-time high of 1,895.18 points in mid-April.

However, historically, the financial adage may not be true, as the index gained in the month of May for several years, between 2011 and 2014.

Foreign funds have been net sellers on Bursa year-to-date, offloading RM2.5 billion net of equities.

Pong, who has been predicting lower levels for the index this year, said it is still in a downtrend currently and expects it to fall even lower than the level recorded in December 2018.

“Corporate earnings are not good because consumer spending did not grow very rapidly, at least not sufficient to give an impetus to corporate earnings. In addition, the ringgit saw a spell of weakness and I hope it doesn’t worsen further,” he said.

He said the overall stock market has been depressive, with sectors such as plantations, finance and telco bringing in weak corporate earnings. The plantations sector weakened year-on-year due to lower crude palm oil prices while the finance sector has not seen strong loan growth.

The telco sector struggled amid heightened competition last year and the weak trend continues this year.

However, Pong noted that Malaysia is currently in a two-tier market and while blue chips are languishing, the performance of small caps has been pretty decent so far this year, and he advised investors to focus on cheaper small caps.

Meanwhile, a fund manager who declined to be named, said that the “sell in May and go away” adage is not applicable in Malaysia, especially among ins-titutional investors.

“News flow matters more. News flow such as the revival of the East Coast Rail Link and Bandar Malaysia as well as the valuations and earnings potential of the stocks matter more than the ‘season’ to buy or sell,” he said.

He believes there is still room for upside in the FBM KLCI in the second half of the year, driven mainly by big contracts being awarded to big companies with spillover benefits for smaller companies.

“Factors that will drive the KLCI would be reactivation of various infrastructure contracts while factors that will hamper the index include weak consumer sentiments, weaker earnings and unexpected turn of events related to decision-makers,” he added.

He advised investors to keep track of company earnings and watch out for news flow of government-related projects, the awards of which will help with the positive sentiments for the respective sector.

Gamuda, IJM tipped to be big winners in ECRL revival

PETALING JAYA: The potential beneficiaries in the revival of the East Coast Rail Link (ECRL) project include companies with rail-related experience and specialist contractors, while the big winners could be the likes of Gamuda Bhd and IJM Corp Bhd, said PublicInvest Research.

The research house said the beneficiaries could be the “usual suspects” with rail-related experience such as Gamuda, IJM Corp, WCT Holdings Bhd, Malaysian Resources Corp Bhd (MRCB), TRC Synergy Bhd, TSR Capital Bhd, Muhibbah Engineering (M) Bhd, Gadang Holdings Bhd, Gabungan AQRS Bhd, Sunway Construction Group Bhd, FajarBaru Builder Group Bhd, Mudajaya Group Bhd, Ahmad Zaki Resources Bhd, Ekovest Bhd and UEM Construction.

Specialist contractors such as Advancecon Holdings Bhd for earthworks, Econpile Holdings Bhd for piling, EITA Resources Bhd for system, Kimlun Corporation Bhd as a supplier for precast components like segmental box girders as well as tunnel lining segment, HSS Engineers Bhd for technical studies, Lafarge Cement and Tasek Corporation Bhd could also be beneficiaries.

“Amongst all, we think the big winners could be Gamuda given its expertise, and IJM Corp for its engineering construction capabilities and strong presence in the East Coast Economic Region corridor. IJM also owns 60% stake in Kuantan Port including 700 acres of industrial land near the port,” it said.

MIDF Research opined that Lafarge Malaysia Bhd and HSS Engineers Bhd could be the immediate beneficiaries as both companies have clinched sizeable jobs from China Communications Construction (ECRL) Sdn Bhd (CCC) previously.

While the local construction sector may see brighter prospects with order book replenishment, the size of contract, number of packages and the real contribution to the companies’ bottom line are unknown at this juncture, said PublicInvest Research.

About 40% of subcontractor jobs are expected to benefit local players, translating into RM17.6 billion worth of contracts that will be available to local construction players.

“The ECRL project aside, we don’t see any other catalyst or major development that could re-rate our stance on the sector. The 11th Malaysia Plan Mid-Term Review and Budget 2019 have thrown up guidance of lower growth going forward and reduction in development expenditure. With share prices of construction companies having already re-rated ahead of this somewhat-expected development, we believe much of the positives have already been priced-in,” said PublicInvest while maintaining its neutral rating on the sector.

Meanwhile, HLIB Research opined that the potential beneficiaries of resumption of the ECRL project are Gamuda, IJM, HSS Engineers, Gabungan AQRS, Econpile and Advancecon.

“Although we do not expect the domestic construction industry prospects to go back to where they were during the period of pre-GE14, we opine that the worst is over for the industry.”

It added that the probability of revival of the Kuala Lumpur-Singapore High Speed Rail (HSR) project is lower than that of the ECRL given its larger cost (RM60-70 billion) and lower compensation amount (RM500 million).

“Should the project revival materialise, we reckon that interest would be on Gamuda and MRCB which was previously appointed as the project delivery partner.”

HLIB Research maintained its “neutral” call on the sector as it deemed year-to-date surge in construction counters has been reflected the positive sentiment.

On Bursa Malaysia today, the construction index fell 1.14% to 203.32 points against the FBM KLCI’s 0.07% gain.

KL shares mixed at end of morning session

KUALA LUMPUR, April 15 — Bursa Malaysia ended the morning session mixed, as mild profit taking emerged in selected heavyweights, despite positive sentiments on the local and global economic market as well as an uptrend on regional peers, dealers…